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Consumer spending grows 4 per cent in February as essential expenditure jumps to another record high

Mon Mar 06 19:01:00 EST 2017

  • Consumers spent 4 per cent more year-on-year in February, driven by the highest-ever increase in ‘essential’ item expenditure (6.1 per cent), with rising prices helping to produce uplifts in supermarkets (2 per cent) and on petrol (19.2 per cent)
  • Non-essential spend growth (3.5 per cent) slowed for the fifth consecutive month as consumers rowed back on material goods in favour of experiences, reflected in a record rise of 23.3 per cent on cinema, event ticket and theatre spending
  • Confidence in the UK economy remained broadly flat (37 per cent), up one percentage point on both January 2017 and the same month in 2016, although the number of those feeling confident in their household finances received a boost, up six percentage points on the month prior
  • ‘Shrinkflation’ has started to take hold, with six in ten consumers noticing that while prices haven’t changed for their everyday grocery items, they now get less product for their money

Consumer spending performed robustly in February, growing 4 per cent year on year, partially driven by price increases that continued to drive uplifts in ‘essential’ spending including petrol and groceries.

Data from Barclaycard, which processes nearly half of the nation’s credit and debit card transactions, shows that spending on day-to-day necessities hit 6.1 per cent, the highest growth since Barclaycard started reporting on consumer spending in 2012.

While shoppers spent more on the forecourt (petrol up 19.2 per cent) and in supermarkets (2 per cent), growth in discretionary categories continued to slow, falling to 3.5 per cent, its lowest increase in seven months. The decline was reflected in consumers paring back their expenditure on ‘nice-to-have’ goods, with department stores (-5.2 per cent) and electronics (-4.5 per cent) both seeing falls.

Spending on the ‘experience economy’ remained robust, however, suggesting that shoppers chose to forego physical goods in favour of leisure activities. Entertainment spend recorded double-digit growth of 10.8 per cent, as consumers splashed out on theatre and concert tickets. The imminent arrival of Broadway hit Hamilton and a highly anticipated ticket release for Ed Sheeran’s Divide tour helped to boost spending on cinema, event tickets and theatre to a record high of 23.3 per cent. Pubs and restaurants also continued their strong performances, up 13.3 and 11.4 per cent respectively.

The propensity to spend on social occasions shows that consumers are still willing to spend on treats, with more than a fifth (22 per cent) planning to increase their expenditure on holidays next month. This is partly supported by an uplift in those expressing confidence in their household finances, which climbed to 60 per cent in February, rising from 54 per cent the month before. Meanwhile, confidence in the UK economy remained broadly flat (37 per cent), up 1 per cent on both January 2017 and the same month in 2016.

Yet concerns around the wider economic picture are still evident, as four in ten (41 per cent) consumers say that uncertainty around the imminent triggering of Article 50 is undermining their confidence in the UK economy. This was followed by fluctuations in the value of the pound increasing the price of goods, with 28 per cent saying this made them feel downbeat about the economy.

Concerns about inflation may also be leading to a record majority (69 per cent) of consumers saying they are now careful to seek out value for money when making purchasing decisions. The new phenomenon of ‘shrinkflation’ has taken hold as almost six in ten (62 per cent) shoppers have noticed that while prices haven’t changed for the grocery items that they buy, they get less value for money either because of smaller amounts or fewer pieces per pack.

It seems shoppers expect this trend to continue, with nearly three in ten (29 per cent) expecting to spend more on groceries in the next four weeks. Over the coming months, half (52 per cent) of consumers say they expect to reduce their spending on entertainment and social occasions as a result of the need to spend more on essentials such as groceries and petrol.

Paul Lockstone, Managing Director at Barclaycard, said:

“Consumer spending remained strong in February, but the picture isn’t wholly positive. Rising prices were at least in part responsible for the highest growth in spend on essentials in nearly five years, with the phenomenon of ‘shrinkflation’, where people get less product for their money, also prompting consumers to row back on some areas of discretionary spending.

“Despite this, and continuing underlying concerns about the economy, we saw a small yet welcome uplift in the number of consumers confident in their household finances, which meant they continued spending on the ‘experience economy’, with entertainment and leisure particularly robust.”

 

Y/Y Spend growth by category

Overall

Online

In-store

Clothing

0.4%

15.7%

-6.3%

     Family Clothing

1.5%

18.1%

-5.3%

     Shoe Shops

-5.2%

16.6%

-12.1%

     Women’s Clothing

-1.9%

10.3%

-8.5%

     Men’s Clothing

-1.2%

8.5%

-6.2%

Restaurants

11.4%

22.5%

10.5%

Books, Newspapers & Magazines

102.1%

213.6%

11.3%

Auto Parts & Accessories

-1.5%

2.7%

-2.7%

Cinema, Theatre & Dance

23.3%

35.1%

-0.5%

Public Houses

13.3%

1.8%

13.5%

Department Stores

-5.2%

2.0%

-6.9%

DIY Stores

0.7%

21.2%

-1.4%

Travel Agents

0.8%

4.8%

-3.3%

Airlines

-0.1%

6.4%

-26.0%

Supermarkets

2.0%

7.6%

1.6%

Petrol

19.2%

40.9%

19.2%

Gambling

9.4%

31.5%

-20.1%

Vehicle Sales

-7.3%

51.3%

-8.0%

Hotels

10.6%

45.4%

2.5%

Auto Repair Shops

-9.7%

23.3%

-10.6%

Sports Shops

0.6%

7.8%

-2.1%

Furniture Stores

14.3%

14.9%

14.2%

Telecoms

11.7%

34.0%

-0.3%

Household Appliances

-5.9%

3.7%

-10.7%

Jewellers

-2.0%

1.6%

-2.4%

Sports and Games Establishment

-1.6%

-0.2%

-2.3%

Garden Centres

2.1%

10.4%

0.6%

Discount Stores

6.3%

42.7%

0.9%

Gift Shops

-12.8%

-25.8%

-6.4%

Floor Covering Stores

0.0%

15.6%

-1.3%

Tourist Attractions

2.3%

13.6%

-7.0%

Amusment Parks

13.7%

20.2%

11.8%

Aquariums

-36.6%

-61.4%

-27.6%

Electronic Stores

-4.5%

3.4%

-8.1%

Overall

4.0%

15.0%

0.2%

Online share of spend

Clothing

35.5%

Travel Agents

53.0%

Average Transaction Value

Overall

-5.8%

Clothing

-0.3%

Airlines

-6.7%

Restaurants

-8.8%

Supermarkets

-5.6%

Petrol

6.1%

Number of Transactions

Overall

10.5%

Clothing

0.7%

Airlines

7.0%

Restaurants

22.2%

Supermarkets

8.0%

Petrol

12.4%


For more information please contact Linda Yang on 0203 555 5586  or siyuanlinda.yang@barclaycard.co.uk.

The spend data in this release relates to the period 22 January 2017 to 18 February 2017 and compares it with 24 January 2016 to 20 February 2016.

The February confidence data is from YouGov Plc. Total sample size was 1,507 adults. Fieldwork was undertaken between 20 - 21 February 2017. The survey was carried out online. The figures have been weighted and are representative of all GB adults (aged 18+).